U.S. grains: Minneapolis, K.C. wheat futures rise

MGEX December 2019 spring wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. soybean futures rose on Monday, rebounding from a sharp drop on Friday, on fresh export deals with China and rising concerns that rains in the U.S. Midwest could lower crop quality just ahead of harvest, traders said.

The adverse weather also supported corn futures while wheat futures were mixed. The most-active Chicago Board of Trade soft red winter wheat contracts eased slightly. K.C. hard red winter wheat contracts were slightly higher while MGEX spring wheat futures soared to a 10-week high, also due to concerns about weather damaging the crop.

“The week ahead continues to put rain where it is needed the least, and away from the areas that need it the most,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a note to clients.

Chinese importers bought about 10 cargoes of U.S. soybeans on Monday, or about 600,000 tonnes, for shipment from Pacific Northwest export terminals from October to December, two traders with direct knowledge of the deals said.

Over the weekend, China’s senior agricultural representative in recent U.S.-China trade talks told state-backed media group Yicai that last week’s meetings between the world’s two largest economies achieved a “good outcome.” Soybean prices had fallen sharply on Friday after Chinese agriculture officials abruptly canceled a visit to U.S. farm states.

Chicago Board of Trade November soybean futures settled up 9-3/4 cents at $8.92-1/2 a bushel (all figures US$).

CBOT December corn futures were up 2-1/2 cents at $3.73-1/4 a bushel after hitting resistance near last week’s high of $3.74-3/4 a bushel.

Traders were waiting for the U.S. Agriculture Department’s weekly update on crop progress and conditions on Monday afternoon.

“The trade is anxious to see more harvest results but relentless fall rains are becoming problematic for many in the Midwest,” Matt Zeller, director of market information at INTL FCStone, said in a note to clients. “The 2019 growing season appears to be going out just as it came in — a wet and difficult campaign for most U.S. Corn Belt farmers.”

CBOT December soft red winter wheat was down 1-1/4 cent at $4.83 a bushel. K.C. December hard red winter wheat was one cent lower at $4.06-1/2 a bushel and MGEX December spring wheat was 13 cents higher at $5.37-1/4 a bushel.

MGEX spring wheat peaked at $5.39 a bushel, the highest for the front-month contract since July 15.

Reporting for Reuters by Mark Weinraub in Chicago; additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London.

Federal agriculture and finance department officials have been invited to review the Canadian Wheat Board's risk management practices relating to losses in its 2007-08 contingency fund. CWB chairman Larry Hill on Tuesday invited federal Agriculture Minister Gerry Ritz, his officials and officials from the federal finance department to undertake such a review, citing "comments made" by Ritz and his Parliamentary secretary, Saskatchewan MP David Anderson. The board announced in its 2007-08 annual report last week that market volatility had led to losses in the contingency fund that underwrites the risks associated with CWB producer payment options (PPOs). The fund's current deficit is $28.9 million, the CWB reported. During the 2007-08 crop year, Hill said Tuesday, "volatility was so extreme that on some days, the markets moved more in a few hours than they had in the previous year. During these unprecedented months, the CWB remained committed to offering farmers pricing and payment options, even when many other industry players withdrew their programs." According to Hill, the CWB's board of directors in February 2008 asked board management to run a "comprehensive review" of the risks associated with the contingency fund, which in turn led to changes in CWB risk management practices. The CWB then contracted the Calgary commodity market research firm Gibson Capital to run an external risk management and pricing review of the board's PPOs, Hill said. "Comments made by government MPs, however, suggest that we did not take appropriate measures," although Ritz was kept informed throughout the review process, Hill said. "Clearly, the board hasn't learned from its mistakes and continued on with the same risk-management practices," the Winnipeg Free Press quoted Ritz as saying last week as he tabled the CWB's annual report in the Commons. Ritz asked the CWB to explain the fund's losses and assure that it's changed its practices, the newspaper reported. Hill invited ag and finance officials to run a separate review "in order to remove any shadow of doubt" and added that "in the spirit of ensuring the measures we have taken are consistent with corporate accountability best practices, we would also welcome a review of the process by the Office of the Auditor General of Canada." The CWB said in a separate release Tuesday that its directors will also be available to farmers to discuss the board's 2007-08 financial results during a series of Farmer Forums to be held in 20 communities across the Prairies between March 2 and 19. Farmers can pre-register by e-mail or by calling 1-800-275-4292.Correction from source, Feb. 18: The CWB's board of directors asked board management to run a "comprehensive review" of the risks associated with the contingency fund in February 2008, not February 2007 as reported in an earlier version of this article.

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